Land values in Poland have increased by more than 400 percent in the last decade, according to analysis by agribusiness consultancy Brown & Co, with the firm forecasting a slowdown in values and restrictions on foreign investment following the election last week of the conservative Law and Justice party.
Brown & Co’s analysis, based on data from the Polish Agricultural Property Agency, shows a 425 percent increase in land values since Poland’s 2004 European Union (EU) accession, with land rental prices nearly trebling over the same period. The average value of land in Poland ranges from €5,500 to €12,000 per hectare.
“The land law is changing next year, by EU decree, to allow foreign investors to buy land directly [and] there may now be some policy changes that restrict this to protect domestic farmers,” Wojtek Behnke, a senior associate at Brown & Co told Agri Investor.
The recent election marked the first since the fall of the Berlin Wall that a single party has achieved a majority in the Polish parliament. According to Behnke, “there will be workarounds” should the new government enact policy changes to restrict foreign ownership of land, but it will make investment more difficult, he said.
Behnke anticipates that Poland’s land market will turn into “more of a two- or three-tier market, similar to the UK,” with good quality farmland commanding a premium and average farms seeing a slowdown in values.
Brown & Co’s research shows a split in values between the larger, more developed farming sector in the north and west, and land in eastern Poland, which remains a less developed local market. The firm says areas of quality land, such as the Zulawy Delta, an area of high quality alluvial silt soils in the north of the country, trades at over €14,000 per hectare.
Despite the uncertainty following the election, Behnke says the research indicates “a continued optimistic sentiment from vendors. In a market where few sales are driven by the necessity to sell, vendors, certainly in the arable sector, remain bullish on values.”
However this optimism does not extend to dairy farmers, with land values in the sector facing more difficulty in the coming months, according to Behnke. “The oversupply of milk, driven by Russian sanctions and the removal of Europe wide dairy quotas in April, means that the less efficient producers will continue to experience difficult trading situations, which may be reflected in the land market as the year progresses,” he said.